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Saturday, November 3, 2012

Fuel scarcity may persist till New Year

Minister of Finance, Dr. Ngozi Okonjo Iweala and Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke

The current nationwide fuel shortage could persist till the New Year as there have been no conscious efforts by the government to tackle the problems causing the scarcity.
 
Investigations show that the scarcity is caused by a flood of reasons, which include the fact that the Nigerian National Petroleum Corporation, being almost the sole importer of petrol, has been struggling to distribute the product nationwide.

Other factors are that the NNPC’s System 2B Pipeline, vandalised last August, is still out of service, while there are suggestions that the main importer, NNPC, is likely not importing enough for domestic consumption, which stands at 40m litres per day.
 
The System 2B Pipeline pumps petrol from the offshore Atlas Cove Depot in Lagos to the NNPC Satellite Depot, Ejigbo; Mosimi Depot, Ogun State; and also to Ibadan, Ilorin and Ore depots.
However, with the pipeline out of service, the corporation has been finding it extremely difficult to distribute petrol to the areas the depots cover – and throughout the country.
 
With the oil marketers being owed huge amounts in subsidy claims, most of them have been shunning fuel importation under the subsidy regime, thus leaving the NNPC and a few other marketers to do the importation.
 
However, the key problem faced by the NNPC is that of distribution, with the corporation distributing through very few depots in Lagos.
 
“It is impossible for the NNPC to all alone handle distribution nationwide.
 
“When marketers were fully involved, they were discharging and distributing through their depots, but with the current arrangement, the marketers are mainly out of it and the NNPC is just discharging and distributing petrol through about six depots in Lagos as against over 20 depots being fully used for distribution when the marketers were fully involved,” a top marketer told one of our correspondents.
 
The marketer said that the distribution challenge had seen many vessels carrying NNPC imported products queuing up to discharge petrol.
“If the NNPC tells you that it has 30-day supply of petrol, ask it whether the product is already discharged in tanks or it is in vessels on the high sea. The most likely thing is that the vessels are queuing up to discharge because of the few distribution channels,” the marketer added.
 
Besides, our correspondent gathered that there was always a petrol supply challenge whenever the NNPC was the main supplier of petrol nationwide.
It was gathered that at most of the private depots used by the NNPC for fuel supply, it takes about a week for a marketer to purchase a tanker-load of fuel.
 
“It is only when you are ready to offer a bribe that you can get supply in two to three days. There is a backlog of tankers owned by marketers waiting to lift petrol, which had been paid for.
 
“So, the problem is mainly about the System 2B Pipeline not working and everybody having to come to Lagos from all over the country to buy the product. There is no way the queues could be cleared from the petrol stations through the current system,” a top employee of a major oil company told one of our correspondents.
 
The official said that there was no possibility that the System2B Pipeline would be repaired soon because many people, marketers, NNPC officials and some other stakeholders were making billions of naira from the current shortages that started last September in Lagos.
 
“You know that our way in Nigeria is to leave a problem lingering so that we can benefit from it. The NNPC officials are not eager to repair the pipeline because the present system benefits them.
“In fact, many marketers also like the situation the way it is because they are making billions of naira from it,” he added.
 
NNPC’s Acting Group General Manager, Public Affairs, Mr. Fidel Pepple, told one of our correspondents early in the week that the corporation was still awaiting security clearance before it could move its men and materials to site to repair the damaged part of the System 2B Pipeline at Arepo, Ogun State.
 
The nation’s petrol consumption is currently put at around 40 million litres per day.
However, the Federal Government seems not to be in a hurry to get the marketers to resume full importation of petrol under the subsidy regime.
Quite a number of them are still battling with getting their subsidy claims from the FG as the government is putting each claim through serious scrutiny before payment.
 
“The FG is owing my company about N2bn subsidy claims and it has refused to pay, citing various infractions committed by the company. Even though we have incontrovertible evidence that we imported cargoes that we have made claims for, the FG has refused to pay us. We’re incurring interest on the loan taken from the bank every month and that is why we have not been participating in importation,” a top executive of one of the oil companies told one of our correspondents.
 
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, had said the N888bn allocated for subsidy payments in the 2012 budget should be enough to pay petroleum product importers.
She told journalists in Tokyo, Japan, recently that the fund had not been exhausted and should be enough to pay the subsidy bills for this year.
“We’ve not exhausted the fund and there may not be a need for a supplementary budget,” Okonjo-Iweala said.
 
The FG spent over N1.7tn on fuel subsidy in 2011, but it has since tightened the payment system and is currently prosecuting some oil marketers for subsidy fraud.
The government has also constituted probe panels to unearth the rot plaguing the industry.
 
Two of the panels, led by a former boss of the Economic and Financial Crimes Commission, Nuhu Ribadu, and a former Finance Minister, Kalu Idika Kalu, submitted their reports to President Goodluck Jonathan on Friday in Abuja, with serious allegations of corruption embedded in them.
The government is also making efforts to revamp the nation’s comatose refineries with about $1.6bn set aside for their turnaround maintenance.
 
The nation has 445,000-barrel per day crude oil refining capacity, but has been relying on petroleum product imports for domestic consumption.
The government has, however, invited the original builders of the refineries in Port Harcourt, Warri and Kaduna to help revamp them.
Also, the FG has earmarked N971bn for petroleum subsidy in the 2013 budget estimates presented to the National Assembly by the President.
 
The government’s efforts, according to analysts, suggest that it may not completely remove fuel subsidy until it gets the local refineries working optimally.
The country currently saves oil revenue above the benchmark budgeted price of $72 per barrel in the ECA.
 
The 36 governors agreed in June to boost savings in the account to $10bn. Its balance last month was $8.4bn (N1.32tn), the Minister of State for Finance, Dr. Yerima Ngama, had said on Oct. 12.
The nation’s foreign-exchange reserves have increased by 28 per cent this year to $42bn. The Nigerian benchmark Bonny Light crude has also risen by 27 per cent from a June low to $114.52 a barrel.
 
Culled from Punch


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